What are some of the risks when using Aliexpress and Alibaba to drop ship?

When using Aliexpress you may be able to drop ship since most of those suppliers are setup to handle and ship small orders direct from their warehouse to your customers.

If you want to buy from Alibaba you may have difficulty finding a supplier that wants to ship small individual orders direct to your customers. Alibaba is set up to ship more bulk sized orders.

So from a shipping factor, you should have no problem buying on Aliexpress or sometimes Alibaba, drop shipping direct from China, and selling on Amazon. The problem you may encounter is the shipping times and lack of direct control about shipping time and tracking numbers, and the amount of competition you may face from other sellers.

Amazon is a great selling platform that gives sellers of all sizes the opportunity to reach a whole lot of customers. As with all good things, you do have to understand a few of the problems you may face. Here are just a few for your consideration.

  1. Drop Shipping is not Free! Your suppliers will add the handling cost and shipping charges to the cost of the merchandise. Many times you could ship the products cheaper from your own warehouse , garage, or storage locker. You get lower shipping charges domestically than what is charged for shipping small orders by International mail.
  2. Order processing and delivery times. Many suppliers require extra time to prepare and ship your order. They may not be warehousing the item you want to buy and they may have to buy it from their supplier, before they can ship to you. This could add a few days or even a few weeks to the processing time before the order is even shipped. If you follow e-commerce trends and news at all, you will see that the customer expectations have reached the point of wanting delivery ASAP. Amazon is testing same day delivery and next day delivery in some locations, and even with normal priority mail or UPS customers expect to receive their order in 3 to 5 days maximum.
  3. Shipping times. As mentioned in point #2, if you ship a package using a domestic carrier like USPS, UPS, or FEDEX, you can expect 3 to 5 day delivery times under normal circumstances. International shipping, on the other hand can take 7 days to up to 5 weeks using International express mail. Yes, you can use DHL, UPS, or FEDEX to have faster shipping times but you pay a high price for the time saved.
  4. Customer Service and Competition. Buying direct from Alibaba or Aliexpress may allow you to sell a little cheaper than your competition but potential customers may decide to spend a little more to get their order faster. If you are buying from Aliexpress or Alibaba you are not buying a unique, “Niche” item. It is available to everyone, so competition will be fierce.
  5. Customer Service and Amazon. Amazon is a very customer service oriented sales platform. Keep in mind that when you sell on Amazon, you are not Amazon’s priority customer. The shopper and person ultimately placing the order is the priority customer. Amazon does not care which of its sellers gets the sale. Amazon gets their selling fees no matter who sells the item. What Amazon does want is satisfied customers. They want happy customers. Low prices, low shipping costs, and quick delivery keeps customers happy. If you do not tell your customers before they order that it may take 5 or 6 weeks for delivery, customers will not be happy. They will send you emails asking for info and tracking numbers. If you can’t give them acceptable information they will complain loudly. They will complain to Amazon, which of course does not make Amazon happy. If you get enough unhappy customers complaining to Amazon about your service, Amazon will suspend your listings and cancel your account.
  6. Customer Service and Payments. When a customer makes a purchase on the Amazon website, Amazon processes the customers payments. When you place your order with your Alibaba or Aliexpress supplier, they charge your credit card or request confirmed payment using whatever method you both agree on. Amazon will not release funds to you until you provide a verifiable tracking number, and if you are a new seller may also hold your funds while they confirm you are legitimate. If money is an issue for you, be aware that you will have to pay for your order out of pocket, and get the funds disbursed from Amazon some time later. I mentioned payments because you may be faced with some difficult situations. For example, you receive an order on Amazon, for an item you buy from Aliexpress. You immediately place the order and make your payment to your supplier. The supplier tells you he will ship in 2 weeks and you know EMS will take 2 weeks more in transit. Meanwhile, your customer is watching his email for a tracking number and checking his mailbox everyday looking for his package. Your customer didn’t read your ad very good and failed to see a 4 week delivery time. After 10 days he contacts Amazon and cancels his order with you, and reorders from a seller offering next day shipping and 3 day delivery. You immediately contact your supplier to cancel the order, but he tells you he has already shipped and gives you a tracking number. The net effect, you have paid for an order plus shipping charges for a customer that has cancelled. The merchandise is on the way and cannot be recalled by the shipping company. You contact the customer and tell him his order is on the way. Unfortunately, he tells you he has already received his new order and is really enjoying his product. Oh, and by the way, he tells you your service sucks and he is leaving you a negative review. You ask him to please refuse delivery when your shipment arrives. He may or may not do this. OOPS, you have just lost a lot of money and maybe your company reputation. You lose the cost of the merchandise, the shipping charges, and possibly the return shipping charges from the customer to you. People do read customer reviews and Amazon does too.
  7. Customer service and returns. Ok, assume the customer has received his order but contacts you for a return authorization number. You ask him why and he tells you he doesn’t like the color. You reply, but I said in the ad the item is only available in BLACK. His reply of course, is, it’s not the right color black. You issue the RA and now are stuck with extra return shipping charges and a used item you may or may not be able to resell. Remember, Amazon likes happy customers. Suppliers that don’t accept returns or get too many returns don’t make Amazon happy. An unhappy Amazon cancels seller accounts. To make matters more difficult, Amazon just released a new policy aimed at third party sellers.  http://www.cnbc.com/2016/11/03/amazon-rolls-out-another-policy-that-has-sellers-on-edge.html

Drop shipping is a great way to get started in the world of e-Commerce. You don’t need a warehouse, you don’t need to purchase large quantities of inventory, but you still have to give great communication and service to your customers. Use drop shipping as a research tool to test the market. Then when you find those great selling items, buy quantity and fill orders by yourself. It’s cheaper and gives you great control over your service.

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s